New fire service levy regime

Higher levies and stronger compliance measures are key features in the new Fire and Emergency New Zealand (FENZ) Bill.
New Zealand Insurance
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Higher levies and stronger compliance measures will be key features in the new unified fire service to be created by the Fire and Emergency New Zealand (FENZ) Bill, now before the Government Administration Committee.

The submission deadline and report back dates have yet to be set but the Government wants the legislation to come into force on 1 July 2017.

New levy structure

The Bill will broaden the levy:

  • to include all material damage cover, not just fire insurance, and
  • on motor vehicle insurance to include third party insurance.

Paying according to the indemnity value of the property, where this is lower than the sum insured, will no longer be an option. The levy will be calculated on the maximum amount insured under the policy, being either an express sum insured or the value declared by the policyholder (based on the nature of the insurance - typically, reinstatement value under a commercial material damage policy).

The levies will be set by regulation and will be subject to review at least every three years to ensure they maintain value.

Compliance regime

The Bill includes anti-avoidance provisions, creating a sliding scale of offences and penalties in relation to levy underpayment.

An "unacceptable levy position", where the resulting shortfall is more than both $50,000 and 1% of the total levy for the property, will attract a penalty equivalent to 20% of the amount owing.

Gross carelessness, defined as conduct suggesting or implying "a high level of disregard for the consequences" will attract penalties equivalent to 40% of the shortfall.

And levy-payers who have taken an "abusive levy position", essentially deliberate avoidance, will be liable for 100% of any shortfall.

Other key changes

  • Unifying the existing urban and rural fire organisations within a renamed New Zealand Fire
  • Service Commission, with expanded functions and powers.
  • New provisions for managing hazardous substances.
  • Removal of the ability to recover the costs of rural fires.

The information in this article is for informative purposes only and should not be relied on as legal advice. Please contact Chapman Tripp for advice tailored to your situation.

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